UPDATE: Although several companies are claiming that recently passed corporate tax cuts are moving them toward paying workers more, at least one corporation that has said as much is actually terminating hundreds of its employees contracts while doing so.
More than 700 technicians in five states have been laid off by AT&T, in a move that the company is describing as “[aligning] our workforce with the changing needs of the business.”
Yet just hours after Congress passed corporate tax giveaways in its new bill, the communications supergiant was instead touting how the tax cuts would benefits its workers in substantial ways.
“This tax reform will drive economic growth and create good-paying jobs,” the company CEO Randall Stephenson said following passage of the bill. “In fact, we will increase our U.S. investment and pay a special bonus to our U.S. employees.”
Why are some employees getting bonuses while others are getting pink slips? The move is sending mixed messages about the overall impact the tax bill really has.
Other companies are also sending mixed messages. Wells Fargo had previously denied that the tax bill influenced their decision to pay workers higher wages, but then made a complete 180-degree turn and said that the bill had played a role.
Higher incomes for workers at corporations across the nation aren’t likely to become the new trend, either. When the Trump administration’s economic adviser Gary Cohn asked a room full of CEOs to raise their hands if the tax cuts would lead to more jobs or better pay, barely any responded to him in the affirmative. “Why aren’t the other hands up?” he asked.
AT&T and other companies might not be rewarding their workers for any reason related to the tax cuts they will soon be receiving. Many of these companies could have afforded pay raises for their workers long ago.
It may be that these companies are trying to improve their public relations’ images, or even trying to curry favor with President Donald Trump, rather than acting out of economic goodwill with the help of an expected influx of capital.
A day after Congress passed a sweeping tax bill, AT&T has announced it will award a $1,000 bonus to its employees if the bill is signed into law.
The telecom giant praised the $1.5 trillion proposal, lauding President Donald Trump for what could be his first and only legislative achievement so far this year.
"Congress, working closely with the president, took a monumental step to bring taxes paid by U.S. businesses in line with the rest of the industrialized world,” said AT&T CEO Randall Stephenson in a statement. “This tax reform will drive economic growth and create good-paying jobs.
While bonuses are always good news, the timing of AT&T's "gift" to its workers seems rather suspicious.
Critics believe Stephenson's support for the tax reform is an attempt to curry favor with the Trump administration in the wake of a Department of Justice lawsuit against AT&T's merger with Time Warner.
First, a quick recap: More than a year ago, AT&T and Time Warner announced an $85 billion merger. However, in November, the DOJ filed a lawsuit to block the deal, arguing the deal "violates antitrust law" since AT&T could "use its control of Time Warner's popular programming as a weapon to harm competition."
When AT&T announced bonuses for its employees while praising the GOP tax plan, it made Trump look good. And when Trump looks good, he makes sure others also see it.
And that's exactly what happened.
“This just came out. … AT&T plans to increase U.S. capital spending $1 billion and provide $1,000 special bonus to more than 200,000 U.S. employees, and that’s because of what we did,” Trump said during remarks at the White House, soon after the telecom behemoth's announcement. “That’s pretty good. That’s pretty good.”
So, while AT&T's intention to award bonuses to its workers is a nice gesture, it might just be a PR move and not exactly a good example of the effectiveness of Trump's tax plan.